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Bombardier CSeries Deliveries to USA May Face 220% Duty

The US will impose a duty of almost 220% on Bombardier CSeries imports if a parallel price-dumping investigation finds subsidies on the narrowbody jet ordered by Delta Air Lines in April 2016 threaten to materially damage Boeing. The duty is expected to be in place before deliveries to Delta begin in April.

“The US Department of Commerce today affirmed that Bombardier has taken massive illegal subsidies in violation of existing trade law,” Boeing said after a Sept. 26 preliminary ruling by the Commerce Department. “Early next month, Commerce is expected to confirm the magnitude of the illegal dumping and announce additional duties.”

Boeing claims the CSeries was sold to Delta for less than $20 million, well below the $33 million price of production - figures Bombardier and the airline dispute. The manufacturer sought a duty of 160%, but Commerce has assessed a subsidy rate of 219.3%.

“We strongly disagree with the Commerce Department’s preliminary decision,” Bombardier said. “The magnitude of the proposed duty is absurd and divorced from the reality about the financing of multibillion-dollar aircraft programs … US trade laws were never intended to be used in this manner.”

Boeing alleged the CS100 price secured by Delta endangers the future of the 737 MAX 7, the smallest version of the MAX family, although the US manufacturer acknowledges it did not offer the aircraft to meet Delta’s requirement for a 100-110-seat aircraft.

This rapid, US-only action contrasts with the long-running battle over Airbus and Boeing subsidies, which has been ongoing at the World Trade Organization (WTO) since 2005. If the US imposes the countervailing duty on CSeries, Canada is expected to take its case to the WTO.

“The US values its relationships with Canada, but even our closest allies must play by the rules,” US commerce secretary Wilbur Ross said.

“Commerce’s preliminary determinations almost always rule in favor of the US complainant,” Canadian foreign affairs minister Chrystia Freeland said. “Canada simply disagrees with the anti-dumping and countervailing duty investigations … This is clearly aimed at eliminating [the CSeries] from the US market.”

UK Prime Minister Theresa May said on Twitter that she was “bitterly disappointed” by the Commerce decision. Wings for the CSeries are produced in Northern Ireland and the UK provided repayable launch aid for the aircraft alongside the governments of Canada and Quebec.

In addition to the parallel price-dumping and countervailing duty investigations in the US by the Commerce Department and International Trade Commission, Canada faces a WTO dispute filed earlier this year by Brazil and Embraer over subsidies for Bombardier and the CSeries.

“If Commerce makes an affirmative final determination, and the US [ITC] makes an affirmative final decision that imports of aircraft from Canada threaten material injury to the domestic industry, Commerce will issue a [countervailing duty] order,” the Commerce Department stated.

If the order proceeds, US customs will be instructed to collect cash deposits from importers of CSeries aircraft. Delta has not commented on the preliminary decision and Bombardier has declined to discuss what other options it may have if the duty is imposed.

By: Graham Warwick

NS Comment: Many of us have enjoyed our time working on various Boeing aircraft models. However, a predatory stance that sees off new entrants into the market does not augur well for the progress of the industry.

Re: Bombardier CSeries Deliveries to USA May Face 220% Duty

Delta Air Lines CEO Ed Bastian said the Atlanta-based airline will not pay tariffs on the Bombardier CSeries and acknowledged the brewing trade dispute between the US and Canada over the aircraft may delay its delivery to Delta.

Delta has 75 CS100s on firm order and is scheduled to take delivery of its first in the spring of 2018. Delta’s order, which also includes options for 50 more CSeries aircraft, led Boeing to file a complaint with the US Commerce Department, alleging financial help from the Canadian federal and Quebec provincial governments on the CSeries program enabled Bombardier to sell the aircraft to Delta at an “absurdly low” price. Initial rulings issued by the Commerce Department in late September and early October called for Delta to pay as much as 300% in duties on each CSeries aircraft it receives.

Those duties would be put in place if a parallel investigation by the US International Trade Commission (ITC) finds that CSeries subsidies and price-dumping have caused material damage to Boeing. The ITC ruling is expected in the first quarter of next year, just ahead of planned first deliveries to Delta.

During an Oct. 11 conference call with analysts and reporters, Bastian was emphatic: “We will not pay those tariffs.” He said Delta does still “intend to take the aircraft,” although he acknowledged “there may be a delay as this debate gets brought to a head over the next 12 months … We believe Delta will get [the CS100s] at the agreed contractual price.”

Bastian said it is still “early” in the process by which the CSeries duty issue will be resolved, noting the Commerce decision has “triggered a lot of discussions at the political level beyond aerospace.” Bastian said the Commerce decision “is not just disappointing—it doesn’t make sense.”

He added that ITC will have a hard time detailing material damage to Boeing from the Delta CSeries order.

“In our opinion, it is very difficult for Boeing to claim harm,” he said, noting that Boeing “did not offer and they do not have” an aircraft in the size range of the CS100, which Delta plans to configure with 110 seats. Boeing’s positon is “a bit nonsensical,” Bastian said.

He added Delta is in talks with Bombardier about “various other plans or alternatives we’re contemplating” if the duty is imposed, declining to elaborate.

Re: Bombardier CSeries Deliveries to USA May Face 220% Duty

Belfast Telegraph
The US International Trade Commission (ITC) said rival manufacturer Boeing did not suffer injury from Atlanta-based Delta Airlines’ order of Bombardier’s C Series passenger jets.

The court victory has safeguarded jobs in Belfast and Newtownabbey, where the C Series wings are produced.

Prime Minister Theresa May, who raised the issue with US President Donald Trump at the World Economic Forum in Davos, Switzerland, said: “I welcome this decision, which is good news for British industry. Bombardier and its innovative workforce play a vital role in the Northern Ireland economy.”

Northern Ireland Secretary Karen Bradley said it was “excellent news” and that Bombardier would continue to play a “hugely important role” in the country’s economy.

She added: “I know Bombardier workers and their families have been waiting some time for this and I wish them well as we welcome this news together.

“The UK Government has been working tirelessly to safeguard Bombardier jobs and argued from the very start this case was wholly unjustified,” she added.